Episode 128

Financial Secrets for Growing Your Creative Business with Avi Pinsky

This week, we’re getting geeky about money on the podcast. Both my guest and I love money, numbers, and all the financial aspects of business, and there’s tons of value in this conversation for service providers and entrepreneurs of all levels. If you’re a business owner and ready to take control of your finances, this episode is for you.

Avi Pinsky is CEO of Pinsky Consulting. Avi is a recovering accountant who uses his strong financial background to help struggling business owners understand their numbers so they can make smart decisions in their business. Avi helps his clients regain control of their finances, reach both their personal and business money goals, and build a better life for themselves and their loved ones.

Tune in this week to discover how to take control of your finances as an entrepreneur. Avi Pinsky is sharing his expertise as a business coach with an accounting background, outlining the mistakes he sees entrepreneurs of all levels making, and teaching you how to look at your numbers and adjust your pricing so you can create as much profit as possible. 

If you want to make six or multiple six figures in 2024, my group coaching program Wired for Wealth is just for you. This is my lifetime-access coaching program designed for coaches, creatives, and service providers who want to create consistent high-income months with a small audience. Wired for Wealth is now open for enrollment, so click here for all the details!

If you want more information, please attend my free masterclass: 5 Pricing Myths You Need to Bust to Make More Money and Keep It. It’s happening June 6th 2024, so stay tuned.

What You’ll Learn from this Episode:

  • How Avi Pinsky helps CEOs and service-providing entrepreneurs with the financial side of running a business.
  • Why the universal principles of finance can help any size business thrive.
  • How you wear two hats as an entrepreneur, and each role requires that you make different decisions.
  • Some of the biggest mistakes entrepreneurs and CEOs make in business.
  • Avi Pinsky’s advice for pricing your services and adjusting your pricing when necessary.
  • An amazing resource to help you look at your numbers and decide what you need to do differently in your business.


Read the full transcript now

You’re listening to The Jewish Entrepreneur Podcast with Debbie Sassen, Episode 128.

If you want to make six- or multiple six-figures this year, in 2024, then my group coaching program Wired for Wealth is just for you. Wired for Wealth is my lifetime access coaching program designed for coaches, creatives and service providers who want to create consistent $5K, $10K and $15,000 income months with a small audience.

Wired for Wealth is the only group program that includes live weekly group coaching calls, business strategy, and income based curriculum, copywriting, editing, feedback, money mindset, and so much more, to walk you into a six- and multi-six-figure business that will take care of your family.

We will support you through all of the challenges, difficult decisions, and growth that comes with growing a six-figure business in this industry. I have walked several clients into their first $50K, $100K, $200K, and $500,000 years using our Wired for Wealth method.

I will be sharing all of the details inside of my free masterclass “Five Pricing Myths You Need to Bust to Make More Money and Keep It”, happening on June 6th. You can go to my website, DebbieSassen.com/wealth, to get all of the details.

The investment to join this lifetime group coaching program, where you get unlimited live weekly coaching for life, is $555 for 12 months. Or $6,000 pay in full. VAT applies for residents of Israel. I will see you inside Wired for Wealth on June 6th.

Welcome to The Jewish Entrepreneur Podcast. I’m your host, Debbie Sassen. I went from being a financial adviser, author and chronic underearner to building my business to six figures as a financial planner and money mindset coach. And then, on to multiple six-figures as a fulltime money and business coach.

I help entrepreneurs create money making businesses and build wealth, using sales and money mindset strategies in alignment with authentic Jewish values. Now, let’s dive into today’s show.

Hello, hello. Hello, my friends, and welcome back to the podcast. I am so excited to share with you my guest today. I had the pleasure, recently, of sitting down with Avi Pinsky, CEO of Pinsky Consulting, and we got a little bit geeky, you guys, because we both like talking about numbers and money, and all of the financial aspects of business.

I have to say Avi likes to get a little bit geekier than I do, and I had to pull him back down to earth to talk to my coaches and creatives who are not manufacturers and they’re not in the industrial world. I think that there is so much value in this episode.

Let me give you a quick introduction to Avi. He is a recovering accountant. He was a CPA for over a decade. Today, he uses his strong financial background to help struggling business owners understand their numbers. Meaning their money, their finances in their business. Because Avi loves to help business owners make smart business decisions.

Avi loves helping his clients regain control over their finances, so that they can reach both their personal and business money goals, and build a better life for themselves and their loved ones. We had such a rich conversation… That was no pun intended, by the way. But I love it. Let’s welcome Avi onto the podcast. Let’s go.

Debbie Sassen: Avi, hello, and thank you so much for joining me today on the podcast. I am really looking forward to this conversation. We’ve been trying to have it for a while. So, let’s go. Let’s start by you introducing yourself, and tell my listeners all about you and the work that you do.

Avi Pinsky: Yeah, thank you for having me. I was looking forward to it for a while. I’m Avi Pinsky, and my practice is Pinsky Consulting. I’m a business coach, consultant, advisor; whatever pedal you want to put on it. I help people understand their numbers, their financials, in a way where they can gain actionable insights from the data that’s hidden there.

I help entrepreneurs, business owners who are experts at their craft but don’t really understand how to run a business, per se. They’ve been doing a thing, whether it be a contractor, plumber, dentist, whatever it is, they’ve been doing a craft for years and years and years, and then they say, “Let me open up my own business.”

But then, all of a sudden, they’re turning over from being an employee into a business owner. So, I help them kind of understand what it means to be a CEO of a company, to run a business, and understand how to grow the business in a smart way, instead of flying by the seat of their pants.

Debbie: Okay, so I also say that I’m a business coach. So, let’s even get more specific, because you say you’re business coach, I say I’m a business coach… What is it that you do that maybe I do or maybe I don’t do? Let’s get a little bit more specific.

Avi: I help them focus on areas for improvement for their company. Taking them from, let’s say, a half a million dollar company up to $2, $3, $4 or $5 million company, something like that. People who want to grow their business, but the only thing that they know how to do is to do the job itself.

I help them transition from being a job owner into a business owner, figuring out on which areas are the most profitable, which are the least profitable, if their pricing is correct, if they have to change their pricing structure, or if sometimes they have to just drop a line of service altogether because it’s just not profitable.

So, I help them dig in to those numbers and really see what the smart decisions are going forward, so that they can grow their business instead of just trying to get more and more and more and more of the same work. How to do it so that they can be a CEO, lead their company, and hopefully work less instead of more in their company.

Debbie: I’m all for working less and making more. So, we’re on the right track. I think most of my listeners have not yet hit half a million dollars in their business. I definitely understand different income streams and the 80/20 rule; let’s focus on the 20% that’s going to make us 80% of our income; and I’m on board.

But for those people who are earlier on in their business trajectory, or maybe for people who don’t even have a goal of creating half a million dollars in their business… They want to make six figures. Maybe they’ll get to $200,000 or $250,000… where do you see people get most tripped up by the numbers in their business, the bookkeeping, accounting? What sort of mysteries do help people uncover?

Avi: Maybe I’ll rephrase a little bit, it doesn’t matter how big your company is, there are certain universal principles about running a business, about understanding of business, that can be applied from the smallest startup, the smallest mom-and-pop shop, all the way to the biggest companies, right? The Googles, Apples, those huge companies that people think of when they’re like, “Oh, that’s a real company. I’m just a store.”

There are still those universal truths that apply across the board. So, those are the things that you have to learn if you want to transition from being a job owner to a business owner.

Debbie: What does that mean to you?

Avi: I’ll say there are really three stages, kind of. There’s a hobbyist; it’s something that’s a passion project which maybe it makes you a few dollars here and there on the side, supplemental income.

After that, I would say a job owner is somebody who is primarily focused on the task of the job, right? So, a dentist who’s filling cavities and all those other dentistry things. A plumber who’s actually going to the house, changing out the boilers, whatever it is that needs to be taken care of. The contractor who’s on the site building a pergola. The carpenter who’s building the chairs, building the deck, whatever it is.

The actual activity of the business itself, that would be a job owner. If you are your own boss, and you are primarily focused on completing the tasks and servicing the clients, you’re a job owner.

And a business owner is somebody who’s more in the managerial leadership role of a company. You have staff who’s taking care of the clients, taking care of the customers, and you have managers who are managing the staff, right? But you are leading the company, deciding: What’s the long-term vision? What are your actual goals? Where are you trying to get to ? Are you trying to get to a quarter million? Are you trying to get to $5 million? Are you happy saying, “We want to stay at $100,000?”

Whatever it is, you’re making those decisions, and the primary activity of your day is spent on meeting those goals, setting those goals, and figuring out what you can do to actually attain those goals. Now, you’re a business owner instead of a job owner.

Debbie: But what about the person who enjoys their work? I’m a coach. I work with a lot of people who are coaches, healers, creatives, and they really enjoy the work that they do. For example, I do 99.-something or other percent of the coaching in my business. Occasionally I bring people on, I bring guest coaches or something like that, or guest teachers.

But even my clients who are creatives, let’s say they run a copywriting agency. They’ll be doing copy, they’ll be writing the copy, but they will bring somebody on as a subcontractor also to write copy. Or for example, I’ll do the coaching but I will bring on a virtual assistant who will do some of the admin tasks. So, Is there a, 2A… before you from Stage 1 to 2 to Stage 3, or something like that?

Avi: I mean, yeah. I personally don’t want to be a business owner myself. I’m personally the same way, right? I enjoy that relationship with people, coaching them, mentoring them, teaching. I enjoy that process. If I ever get to point where I’m not doing that, I don’t think I would be very happy. For me, personally, yeah, I’m the exact same way.

At the same time, if you’re not looking at the big-term goals of where you want to take your coaching practice, or whatever it is that you’re doing, things can kind of go out of control. You can lose control of the business very quickly. So, it’s not like all of a sudden you go from straight being a hobbyist to a job owner, and then there’s a click, and all of a sudden you go into being a business owner, right?

There’s definitely fluidity between the levels, in my mind. It’s just a matter of where’s your primary focus, right? If your primary focus is serving the customers, you’re primarily thinking about your job. So, it’s not a matter of the amount of time you’re spending doing the task, it’s where’s your general focus? What are you actually thinking about? What’s keeping you up at night? Is what’s keeping you up at night the fact that this one client didn’t even finish that job? Or is it not?

My general focus is on the business. I also have to service my clients, but I want to grow the business. I want to make sure that the business is profitable, is pulling in the cash that it needs to pay off its bills, and that it can stay solvent. That mindset, I think, is more of a business owner.

Debbie: Okay, so between now and the next time we have a podcast interview together, you have to think of a different title for 2A. But I like to say that we wear two hats. Because you and I are in similar situations, right? We are the business owner, we’re the CEO, and we’re also the star employee of the business. And, we flip between the two of them.

We want to make sure that when we’re the business owner, we’re making strategic decisions, decisions for profit. And when we’re showing up as the star employee, we have to get compensated. We have to make sure we’re getting paid. That’s number one, because if you are going to work for another company, and you’re the top performing employee, of course, you’re going to get paid, you’re going to get a bonus. Right? We want to make sure that we also get that, and we want to show up like that.

So, do you have a good story of someone that you’ve worked with, a client, that when you went in there and looked at the numbers you had some information and they got an a-ha moment? That will help illustrate the work you do to our listeners.

Avi: Definitely. In terms of the services and products that are offered, they oftentimes get overlooked by people. They’ll think, “I can charge X for this service. I can charge Y for that service.” But they don’t think about what are their costs associated with those services. Is one actually more profitable than another? Is one losing money? Kind of that loss leader, unintentionally. Because the primary product, their loss leader, that basically means they’re going to go out of business sooner or later.

Countless examples of this have come across lately. Again, I don’t want to give too many identifying examples. But at a home service-based product, let’s say it was somebody in the pest control industry. So, you have different services for bedbugs, for ants, for termites, a whole long list; maybe 100 different services that he could offer.

But he never really went through and said, “How many hours does each service state? How much am I paying my employees to do an ant removal versus a termite versus a bedbug spray? How much time are they taking for follow-up visits?”

So, in that case, you don’t know which one is more profitable than the others. Which ones are losing more than the others? And it could be that 99% of your clients are coming for your termite, because you’re the cheapest termite removal in town; for good reason, because you’re the only one who’s losing money on it.

So, you really have to do that analysis and say, “What are my primary services that I provide? How much do they cost me to provide them? How much am I charging my clients? Is it worth it at that?” There’s  no problem with having a loss leader in your business. But if 90% of your business is your loss leader, and the other 10% is only making you $1 per service, you have to reevaluate that business model and see what you can change in order to be profitable. Because otherwise the business won’t last very long.

Debbie: You have to turn your business model on its head. So, I’m going to bring it down home for some of my listeners, and I think this will be relevant to you, Avi, because I know that your wife is a photographer. I have clients who are photographers, and really thinking about: If you’re doing a fourhour shoot for a bar mitzvah, for a wedding, or bat mitzvah. Then you have to go home, you have to do the editing, and do the albums.

What is that cost to you, in terms of your return on your time? Return on your energies? And of course, your money. Versus doing, I don’t know, half-hour headshots, where you can just go through a bunch of people and it’s way less editing.

So, something like that for creatives is very important to look at for their business model. We do get lost in the work that we love doing, so if we don’t stop and evaluate: Where’s my time going? Where’s my energy going? I recently had this with one of my creative clients.

It’s really understanding what your return on your time is. You might find out that you’re earning $15 bucks an hour, and that’s not a sustainable model. Or maybe you’re getting negative $15 bucks an hour, and then you really just have a hobby business.

So, it’s so important to slow down. I like to say to my clients, “You need to do a time audit. Not just figure out where your money’s going,” which is what you and I are talking about, but where’s your time going? And that just goes to so many things, especially if you don’t want to go out there and market and sell. Your time audit might find that you’re searching for comfort food in your cupboards and refrigerators. But that’ll be a topic for a different podcast interview.

Avi: I’ll give you an example from that. It happed this morning, actually. We were talking about our business. And one thing that’s happened over the last few weeks, we were talking about it, is just thinking about travel time, right?

If you’re traveling to one part of Yerushalaim (Jerusalem), it can be one price that you’re going to add on top of the photoshoot. A different part of Yerushalaim, where there’s a lot more traffic to get there, it might be a different price. It might depend on what time of day they want to do the photoshoot.

Something that just came up this morning… As you said, my wife is a photographer. One of the things that she does is, she does newborn photography and she also does “cake smashes”. Where a baby turns oneyear-old you get a little cupcake and you put the baby on a white background, and you say, “Here, kid. Go crazy.”

And the kids, at first they’re a little tentative, “What’s going on? I get this? What is this sugar thing?” They end up making a huge mess. So, she got this roll of background paper, and just after the kid makes a mess she cuts off that portion, rolls up the rest and moves on.

So, that is a cost of doing the photoshoot that doesn’t exist for a regular family portrait or a headshot or just a newborn picture, right? That is basically depreciation of your materials, something you have to factor in. When I buy that roll of background color, is that going to last me 10 photoshoots, 20, photoshoots, 3 photoshoots? That makes a huge difference, right?

If that roll costs you$500, let’s say, and it’s only going to last you five photoshoots, you have to add on $100 for every photoshoot that you’re going to do with a cake smash. That’s just one example. Now, those numbers are probably exaggerated. It probably costs less, and you probably get more usage out of it.

But you have to factor it in to the cost of that photoshoot. You can’t just say, “Well, my jobs are always $300,” or $400 dollars. No. Certain jobs are going to be $500, certain jobs are going to be $200, and it just depends on the materials that you’re going to use.

And then, there’s also your skill level that you have to add in, as well.

Debbie: That’s right. That’s an interesting example. How specific do you get with your pricing? Because there’s also the side where, you go 20 minutes to this side of Jerusalem, and you go 35 minutes to that side of Jerusalem. And this one, the parking you can find somewhere on the street that’s free. And this one, the parking, you have to pay for parking. Do you get specific for every single different… Not necessarily photography, it can be other types of businesses…

But where do you have an average price, and just figure out, okay, sometimes it’s going to be a little bit more, sometimes it’ll be a little less? As my dad always says, “It all comes out in the wash.” Or do you have 28 different prices for every specific type of circumstance?

Avi: So, you can’t get down into the nitty-gritty every time, especially if you are both the primary service provider and the business owner. For business owners, I tend to say look at things very, very high level. That way you can zone in on the areas that need the most help.

You’re not counting pennies with every piece of background. You’re not measuring every inch that you cut off of that thing. You’ll do it a couple of times, and you can always reevaluate your pricing as you go. If at one point, you see you’re using a roll of paper every five photoshoots, and then the next roll lasts you seven, you can adjust your pricing as you go.

I really am a big proponent of taking a higher look at things and trying to put things in baskets as much as possible. Don’t look at every single marketing expense, look at your general marketing expense. Don’t look at every single employee, look at your general payroll.

The similar thing would be with your with your costs, right? You don’t have to look and say, “Well, every two blocks of Jerusalem is going to be a different price point. This side of Jerusalem, which is closer to where I live, is going to be one price point. The other side is going to be another. Somewhere in the middle might be…” You might have three price points.

I’m only saying Jerusalem because that happens to be a place it’s very trafficky, right? If you’re going to, let’s say, Modi’in. Going from one side of Modi’in to the next isn’t necessarily such a big deal. So, I’ll have a Modi’in price point, just based on me getting to that city.

But that’s kind of how I look at it. Put things into as general a basket as you can and they will average out over time. If you see that there really aren’t, and for whatever reason, you’re having them all on the far side and it’s not worth it, you can always adjust on the fly. That’s not a big deal.

But again, it’s easiest to look at things from “baskets” instead of trying to get granular. Because the more granular you get, the more time it’s going to take, the more daunting task it’s going to be, and then you’re not going to do it, right? You have to try to keep things in a way that you can analyze it and assess how it’s going and it’s not going to be a daunting task.

Debbie: Yeah, I agree with you 100%. It’s kind of like, you can run all over town to go shopping at five different supermarkets so you can have the lowest cost price of food, or you can decide on maybe one or two and it’s just going to average out. One week, the tuna is going to be cheaper here. The next week, the laundry detergent… And, it will all come out in the wash. Thank you, Daddy, for that lovely comment that I grew up with.

Let’s talk about the fear that so many business owners have of looking at their numbers. Certainly with many of my clients, the women… It’s not necessarily just women, I’ve worked with men who also don’t want to look at their numbers. But talk to me a little bit about that, because I think it’s pretty prevalent. What do you notice with your clients?

Avi: Nobody who’s not a “numbers” person likes numbers. And if they are a “number” person, then they probably already know them. They’re probably already an accountant themselves.

Debbie: We have to draw a line. I’m definitely not ever going to be an accountant. But I like numbers.

Avi: Okay, I don’t want to be an accountant anymore, either. I was for a dozen years, and I’m done with that. I call myself a “recovering accountant”.

Numbers can be very daunting for people at times. And that’s kind of why I am a proponent of looking at things high level, because then you’re only looking at maybe 10 or 15 numbers every month, depending on how complicated of a business model you have. You could potentially be looking at maybe even six or seven numbers, if it’s a very simplified mode; just analyzing those.

Basically, the way that I look at it with my clients is, at the beginning of every year we look at, overall, those 10 to 15 numbers that fit their business model. We say, “Where do we want them to be? What’s the target that we want to set for this year, for 2024? How much revenue do I want to generate? How much profit do I want to keep from that? How much cash flow that I want to have at the end of the year in my bank?”

And then, each of those numbers has subdivisions, anywhere up to five subcategories within each of those numbers. And, we set targets. Then, on a monthly basis, we just look at those and say, “Which one is actually heading in the right direction? Which ones kind of are lagging behind?”

With that systematic approach it’s not such a daunting task anymore, because you’re only going to see a handful of them, hopefully, that are lagging behind. My job is to narrow… Let’s say all 15 of them are lagging. My job is to analyze which one can have the biggest impact going forward, and right the whole ship back on track.

You’re probably not going to have all 15 of them that are lagging behind. Maybe you’ll have three, four of them. It’s not such a big analysis to say, “Which of those four, if I were to improve it, is going to have the biggest impact on the whole picture?”

I actually have on my website a free giveaway Excel, where you can put in your numbers, put in your targets, and then kind of see where does everything shake out.

If I have X amount of leads, and I’m Y percentage good at converting them into clients, and I’m going to charge them 1000₪ apiece, whatever it is, what’s my revenue going to be for the year? You can then do that same thing with your profits, with your cash flow, and you can see: Where do I expect this year, my revenue, my profit, and my cash, to be at the end of the year?

You can kind of tweak it and say, “Am I happy with that number? Am I not happy with that number? Which of these numbers can I change? Which of them is the easiest to change? Which is going to have the biggest impact?” You can play around with it on that Excel. It’s a very simple, easy to use Excel. Again, the person who’s the least number-enthusiastic person is going to be able to utilize that tool.

And, that’s the idea. To make it so that somebody who doesn’t want to look at their numbers still can, in a way that’s not such a daunting task.

Debbie: Okay, so we’ll put a link to that in the show notes, so that people can go and download it and start dipping their toes in the water even if they’re number… I won’t say number phobic, let’s say number resistant or unenthusiastic. I like that. So, we’ll make sure…

Can you just give us a little sneak peek? What are the, let’s say, six, you mentioned six or seven, what are the basic numbers that you think every business owner should be looking at?

Avi: It’s going to depend on the structure of the company and industry. If you’re talking about somebody who’s in manufacturing, I would say one of the biggest ones that that they should look at is their inventory.

Debbie: I would say most of my clients are not in manufacturing. So, if you’re going to advise your wife, let’s say, and it’s lucky she has you on her team.

Avi: Yeah, okay. So, won’t talk manufacturing.

Debbie: Right, let’s not talk manufacturing. I mean, I did once, a couple years ago, work with a dance studio, and they had two different locations. They had a shop that was selling leotards and tights and tutus and ballet shoes and things like that.

But most of my clients are not having storage facilities with inventory. So, let’s talk about service providers. Again, people who are designing websites, writing copy, coaches. Obviously, if you’re in photography, you do have some physical products and background materials, etc., but it’s significantly less. We’re selling our time and our expertise, and our finished product way more than we’re selling widgets.

Avi: So, let’s backtrack. Of those three numbers; the revenue, the profit and the cash flow, the cash flow is really the silent killer that people don’t focus on. It’s kind of the least understood amongst those who don’t have a finance background. So, everybody understands, I would imagine most business owners understand revenue is the money that you bring in.

Debbie: Okay, let’s define that. Because when I say to people, “Let’s talk your revenue, let’s talk your gross income,” some people don’t even know. So, let’s just even go back to basics just in case someone’s listening who doesn’t get it.

Avi: So, yeah. What’s revenue? Revenue is basically all the money that comes in. All the money that you charge for your service. Whatever your clients pay you, that’s your revenue.

What’s your profit? Your profit is… You have certain expenses that you have to pay in order to generate that revenue. You have to pay your employees. You have to pay your electric bill, your internet bill. You have to pay for your equipment, whatever it is that you’re using. Now, those are expenses.

After you pay for your expenses, you’re left with your profit. However, that profit number is completely theoretical, right? It doesn’t show you how much money you actually take into the business. Because you’re going to have some clients that don’t pay you on time. You’re going to have some clients that don’t pay you at all.

There are a lot of other things that go on in a business that hit your cash out and they’re not reflected on your income statement. They’re not reflected on your expenses or your revenue. So, those are the things that are kind of less understood by the non-finance community. And unfortunately, it can really kill the business. Because once the business runs out of cash, you run out of the gas that powers the engine of the business.

So, if we’re talking about, what are those numbers that people have to focus on that they’re not? I would say it’s all those things that lead to the cash flow, after you take into account the profitability. So, how long are you taking to collect on your accounts receivables, on your IOUs, that your clients have? I had one client where he had this big balance of account receivables that were just growing and growing every month. Where’s that coming from? Why are we not getting paid on time?

That’s something that you have to look into. Because even though you might be saying, “Well, I’m still making money in my business,” you’re not making money. You’re making theoretical money, right? You’re not making actual cash. Your bank balance is not getting reimbursed for the time that you put into it, that you invested in it.

Another one is owner’s equity. Your investments and your withdrawals from the business. If your business has to support your lifestyle, you need to take out money to pay for your rent, to pay for your kid’s education, for your car. These are things that are not reflected in your profitability. So, you have to make sure that the business can actually sustain your lifestyle, and you’re not looking at the business by itself.

You’re looking at as a broader picture of you and your kids and your family, and whatever else that you are meant to be doing with your business. That’s not to say that the sole purpose of a business is for profitability, there are nonprofits out there. But it’s an aspect that you have to take into account when you’re trying to examine: Am I charging the right amount? Am I taking on the right amount of clients? Am I taking on the right clients? Am I taking on clients that are going to pay me?

Debbie: What I like to say is, first of all, you need to know your personal expenses. Right? If you want to have your business… I say, “Our businesses are here to fund our life. Our life is not here to fund our business.” So, if you want that to happen, the first step is understanding how much money you need in your household.

Now, in the beginning of your business, your business is young, you don’t have a lot of clients, you have to get out there, do your marketing, your business might not yet be able to fund your lifestyle. But you need to know how much you need. Cut back where you need to until your business can create that cashflow.

But you want to be able to reverse engineer your business to support your lifestyle, certainly in the earlier stages. And then you want to make sure that you’re profitable. You want to have money to reinvest in your business, to reinvest in your life. Put money away for your retirement, etc. So, we have to look at the numbers on both your personal and your business side. It is, 100%, part of being a business owner, knowing what your lifestyle costs you.

A few weeks ago, I actually recorded some podcasts episodes on this, about mastering the money game. Where I spoke about personal finances, understanding your personal finances, and understanding also how your business should be reverse engineered to cover that. So, thank you for bringing that up.

On that topic, I’m curious what your thoughts are about business debt.

Avi: That’s definitely another thing that affects cash flow of a business, that sometimes gets overlooked. That kind of works the opposite of owner’s equity. There, taking on debt brings in cash to the business. So, if you’re in a business where you need a cash infusion, and there is no other way, sometimes it makes sense to take on that debt. As long as you’ve done an analysis that you can actually carry out the payments to pay off that debt.

Let’s say, going back to a photographer, you need to buy a new camera, you need to buy some new equipment for your studio. To be a baker, you need a new oven for your pizza, bakery or whatever. So, as long as the cash flow in your business is able to sustain the payments, that can be a very useful tool. Don’t shy away from it just because ‘I don’t want to be in debt.’

There certainly are people out there who say, “I don’t want to be in debt.” There are other ways to get cash if you need it. There are lines of credit, where you’re not necessarily paying the interest on the whole thing right away. You can take on investors, if you want to give up some of your equity share. There are other ways to do it.

But don’t be scared of the debt just because it’s debt. If your business can bring in the cash, and your customers can pay you the cash, to then pay off the debt, that’s certainly a legitimate way to grow a business.

Debbie: With the right analysis, I’m 100% in favor of taking on debt. I mean, any pizza shop… Nobody starts a pizza shop without borrowing money. Whether you’re borrowing it from your personal savings account, or whether you’re borrowing it from a bank, or whether you’re borrowing it from your dad, there’s no way you can start a pizza shop without borrowing money from somewhere; or the bank. That’s the way brick-and-mortar businesses get started.

I call it “debt-free entitlement”, where those of us in service industries shun taking on debt to grow businesses. You might know how to make pizza, and you might know how to serve people, but those of us who are putting out our virtual shingle, we don’t know how to get clients. You might need some help hiring a business coach or a marketing coach or a sales coach so that you can get started.

I think that people, especially in service industries, need to do a 180. Now you have to be mindful, you can’t just go throwing cash at every opportunity out there and expecting that that’s going to solve your problems. Because you need to do some work in your business in order to get going.

Avi: You have to know where to invest it. So, you’re doing it in a smart way, and that takes a little bit of analysis. Few businesses are able to be started with zero investment.

Debbie: I was racking my brain for this recently. And I think the only business that I could come up with was dog walking. Because you can go knock on your neighbor’s…

Avi: Provided that the customer provides the leash. Then, yeah.

Debbie: Exactly. Well, most people who have dogs have leashes. I mean, you might need to buy some plastic gloves, and you might need a pooper scooper or something like that. But I thought that that was a very low budget business to start. Certainly, when I had my lemonade stand at the age of 10. I took the lemons off my parents’ tree, the sugar in the water, and the Dixie cups; my parents were basically investing in my startup. It wasn’t a free lunch.

Yeah, so one thing we haven’t talked about, and you didn’t mention this in profitability, so I’m going to. It’s a very important point that a lot of people, especially in the early stages of their business, overlook. Because they either don’t want to deal with it, they haven’t taken the time to deal with it, or other money blocks. But let’s just spend a moment talking about taxes.

Avi: Sure, everyone’s favorite topic.

Debbie: We are former accountants, so you’ve probably spent hours filling out reports and filing them with the IRS.

Avi: Taxes are another expense of the business, and you have to take them into account at some point when you’re trying to figure out the profitability. There are tricks and things that you can do to lower your tax. So, you can have certain investments in property, and depreciate certain equipment. Get a good accountant who knows what they’re doing.

A good accountant is not an expense, it’s an investment. It’s something that, over time, can really save you a lot of money. So, if you get somebody who’s good, knows what they’re doing, and can explain it to you, right? Somebody who cannot speak accountant-nese, but can speak English to you, or Hebrew. Whatever it is that you’re that your language is; French, Chinese, whatever it is.

Somebody who can communicate it to you in a clear way so that you understand what’s going on. You don’t want to just give over the reins of your taxes to your accountant, you want to understand it. You want to have some understanding as to why you’re doing what you’re doing.

But that being said, certainly don’t, when it comes to your job, your job is to not overlook it. To know, roughly, what percentage of your costs your tax expense is going to be, and factor that into your pricing when you’re looking at your expenses.

Am I expecting to have a 10% tax bracket this year? Or 15%? Or 20%? What’s that going to be? You have to include that in your pricing model, because at the end of the year you’re going to get a tax bill and you’re not going to know what to do with it. So, definitely factor it in from the start.

Debbie: Yeah, I would say set money aside. And if you don’t know, it’s better to have money set aside that’s a little bit more, so that you can bring it back, put it into profit account at the end of the year, if you don’t need it all.

Can you spend a moment or two speaking to those of us like you and me, who are dual citizens. And so, I have an Israeli company. My company does no profit in my business, right? I can’t carry over cash investments. If I want to build up and reinvest in my business from year to year, that is a problem or a challenge for dual US-Israeli citizens. Can you speak to that a couple of minutes?

Avi: Probably like what we just said about the tax bill, right? Factor it in, in advance, as much as possible, right? If you can’t carry over profit from one year to the next in order to invest it in Year 2, that doesn’t mean that you can’t use it to invest in Year 1.

Let’s say you’re that pizza shop owner and business is booming, and you’re going to want to get a new oven. You don’t have to wait till Year 2 to get that new oven, you can use some of the profits in Year 1 to get that oven, if you have that amount of profits to invest. That might be a good time, where you might have to take on a little bit of debt in order to…

Let’s say, you say, “Oh, at some point in June, of Year 2, I’m going to have the funds for the new oven. But I’m here, in December of Year 1, and I can’t carry that money over into Year 2.” So, maybe that’s a good time to take out that debt to pay off the remainder of that asset. And then, you can pay off that loan by June of Year 2. Move your profit from one year to the next. Use it to invest as early as possible. Kind of see where you’re going to want to invest down the road.

That gets back to the beginning of our conversation, of being a business owner, of constantly thinking, “What is the long-term goal of my business? Do I have a five year plan? Do I have a three year plan? A one year plan?” And on a monthly or semiannually basis, reevaluating and saying, “Is that five years still realistic? Can I get it done sooner? Am I going to have to push it off?”

“What things am I going to need in order to make that happen? Do I want to turn my pizza shop into a franchise? Then, I have to know what steps I’m going to need for those next five years. It could be, maybe I’ll invest in some area of that a little bit sooner, a little bit later, than I originally planned.”

As long as you have your finger on the pulse, you’re constantly looking from that 30,000-foot view, and leading your company, then you can anticipate those changes ahead of time. You have more room to play around with the numbers at that point.

If you’re not constantly watching what’s going on in your business, that’s where you lose sight of the long-term goals and you run into issues of, “Well, now it’s December 31st. I’ve got to get rid of this profit somehow.” What do you do with it at that point? So, just keep your finger on the pulse, know where you’re trying to go, and know how to get there.

Debbie: So, you did mention a little while ago, and this might be too specific and we might not have a good solution for it at all, but you mentioned an investment in property. Let’s assume that in a couple years from now, I wanted to buy an office space.

There’s a commercial center going up in my neighborhood, and rather than working out of my beautiful home office… I’m not sure I would ever do that, because I can go down for lunch and I can throw in some laundry in between client meetings, but let’s pretend.

I wanted to invest in an office space. And the possibility of building up cash in my business over time, as a down payment for that office space, is that something that, as a dual citizen… Maybe I just don’t know all the fancy accounting tricks… but it sounds like it’s just something that I just have to get over, because it’s going to be something that’s not going to work for me in my business.

Avi: I suggest to people to get both in Israeli and American accountant. Preferably if it’s somebody that knows both of them, that’s great. Because of the intricacies of both systems, the chances that you’re going to get one person who’s an expert in both, highly unlikely, I would say. I don’t know how it is with other countries, but I would imagine in Israel, if somebody claims to be an expert in both I’d be a little suspicious.

If you can find a firm that has both specialists in it, that’s a great option. Or if you have two people that you know have experience working together. There are a lot of American tax accountants who have very good relationships with Israeli tax accountants, and they share clients and they share information.

The key is to have them talking to each other so that they can actually collaborate, right? One of them isn’t making moves that’s undermining what the other person wants to do. So, if they can communicate, collaborate, and really put their minds together, put their expertise together, create kind of a team atmosphere, that’s really the best option from my point of view.

Get that collaboration, get everybody’s expertise on the table, and see how you can work and maneuver both systems so that the whole picture is really the best that it can be.

Debbie: You don’t want anything boomeranging on you. Before we wrap up, this is a question that I always like to ask people because I like focusing on money and money blocks. How has your relationship with money changed since running your own business, becoming an entrepreneur? Maybe even running a business in Israel, which is a little bit different. I don’t know, I never ran a business other than a lemonade stand in the United States.

How’s your relationship with money changed since running your own business?

Avi: I don’t know that it has, yet. Even though I might be helping people with their finances, there’s still… Everybody always feels like they need more. I’m not immune to that just because I am somebody who has some knowledge in the space. Either you never had a good relationship with, or you’re not comfortable with numbers in general. If people are not comfortable with it, you can’t just flip a switch and all of a sudden become an expert.

So, where has my relationship with money changed? I don’t know yet that it has. Hopefully, that doesn’t stay my answer for too long.

Debbie: Do you see that the sky’s the limit with your business, in terms of how much you can create? I’m not saying you want to.

Avi: I see limitations with where I want to take my business. But they’re limitations that I’m okay with. I have a mentor who has a different picture for where he wants his business to go. He wants to be purely a business owner and completely out of the operations. So, he wants to build this into multiple, multiple million dollar business where he doesn’t have to be involved.

That’s not my goal. My goal is to be the primary coach, the primary operator. So, yeah, there are limits with that. But they’re limits that I’m okay with. And, they’re not the sky, but they’re high enough up there that I think that if I reach those limits I’ll be fairly comfortable. I don’t think I’m going to be worrying at that point.

The point is, maybe in terms of the money relationship question, my goal is to get to a point where you can kind of forecast where things are going, and you’re comfortable with it. And if you’re not comfortable with it, that you can make those changes to get comfortable. That it’s not just a mystery of, ‘I don’t even know where things are going now.’ So, yeah, I will say, I guess I’m more comfortable in seeing the goal line, seeing the markers to getting there.

Debbie: Okay, great. Well, Avi, thank you so much for joining me today. Please, tell our listeners where people can find you, if they want to hear more about how you coach them, how you help people become more familiar with their numbers, and make forecasting decisions for their business.

Avi: You can go on my website PinskyConsulting.com You have a little bit about me there. There’s a link there to get my Prosperity Playbook, which is that free Excel tool you can use to set your targets and kind of track your progress along the way. And people can sign up for free consultations where I can… half-hour free sessions just to teach people a little bit about how to understand their numbers, and gain actionable insights on their numbers.

Debbie: All right, wonderful. Thank you so much.

Avi: Thanks for having me.

Thank you very much to everybody for tuning in to our podcast today. I’ll see you next week on The Jewish Entrepreneur Podcast.

Thanks for listening to The Jewish Entrepreneur Podcast. If you want to stop underselling and underearning and close more sales, you need to clear the limiting money beliefs that are sabotaging your business growth.

Head on over to DebbieSassen.com/mindset and download my free Money Mindset Workbook. Uncover and dissolve money blocks, like hundreds of other entrepreneurs who are now building six-, multi-six-, and seven-figure businesses and creating true financial freedom.

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